Export Control Bill

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Nigel Griffiths: I want to make it clear to the Committee how seriously the Government—and I, as the Minister responsible for export control—take, and must take, allegations about diversion and the end use of such products. In my work as a Minister, I weekly, if not daily, consider export licences in which the category about the risk of diversion is a very firm one. I want to be sure that no one in the Committee thinks that it is a casual add-on or an afterthought; it is an integral part of the decision-making process that I am required to take, and to advise the Secretary of State on, where any possible arms export licence is concerned. I am, as any Minister is, obliged to look at the evidence provided by any group about diversion in the past. That includes the excellent work done by our missions overseas, which report back to me, and reports from the Ministry of Defence or defence companies, which may be competitors, of weapons or goods that have previously been diverted. We have intelligence on the subject from non-governmental organisations and international organisations—and from Members of Parliament who also give us feedback. It is all taken very seriously.

I was not aware that Belgium was a shining example of the best arms-control procedures, but I have a briefing note produced in August by the Campaign Against Arms Trade, on the United States. I know that several other hon. Members received a copy of it. Under the heading ``US `diversion' examples'', it cites eight examples from a study of 18 co-production agreements, in which five cases of unauthorised transfers had been found. The briefing paper says of one case:

    ``Brazil transferred US technology to Iraq, where it was used to improve the targeting capability of Scud missiles.''

Of another case, it stated:

    ``Israel has repeatedly transferred US-licensed missile and radar technology to China in the 1980s and 1990s.''

Those are two of eight examples of flaws found in the US system, so although people strongly—and genuinely, like my hon. Friend the Member for Redcar—recommend the US system, I believe that they should also listen to the critics of what happens in the US. As I said on Tuesday, there is a danger that we may introduce a system that, even with the best of intentions, turns out not to do the job that we thought it would.

Let me share with the Committee the practicalities of how Ministers treat requests for export licences. As well as looking at the end use and previous history, we consider the risk of diversion. A thorough exercise is undertaken, using all available information, to assess the risk. Hon. Members will know that previous annual reports, issued when I was not the Minister, contain clear examples of the risk of diversion being the reason for refusal of export licences.

However, I am citing examples given to me of what has happened in America and others are raising examples perhaps of diversion from Britain. The fact that there are such examples shows a failure in the first place not to grant the licence. I am particularly concerned with the new clause because, in principle, it is shutting the stable door after the horse has bolted. For example, some countries talk tough but do not take effective action. Secondly, the new clause is intended to provide follow-up monitoring of all exports of technology, transfers, technical assistance and goods traded that are controlled under the powers in the Bill.

I am sure that no one, not even John Pilger or NGOs, has accused companies of diverting items in the past, nor have they been accused of causing a risk of diversion, but we would have to monitor them as well. If the United States has similar powers, that may be why we have heard of those eight examples of loopholes being exploited or of the US monitoring system being flouted.

I have stressed throughout the passage of the Bill that our commitment to achieve the most effective arms control regime is paramount. I believe that to make it effective we must focus our attention—as we are doing—on the criteria under which Ministers are allowed to operate, and under which officials help the police when dealing with the export of arms or associated technology, and other items in relation to which Ministers are given powers under the Bill.

I resist the new clause for two reasons. First, it could send people off on wild goose chases and divert our officers from monitoring properly what is happening. I am obliged to go through that process in any case; we have refused licences because we have had feedback about diversion. Secondly, the regime that we are establishing, policing and subjecting to parliamentary scrutiny will all greatly narrow the potential for abuse. We all want to eliminate that abuse, but we are dealing with a world in which unscrupulous and illegal arms traders and brokers will seek to evade any rules or laws, as we have seen in the United States and elsewhere. We should resist the new clause, given that powers relating to the risk of end user diversion are embodied in the Bill and that Ministers are already following such practices.

Rob Marris: Could I ask the Minister for an assurance that the monitoring that we are discussing will be covered in the annual report referred to in clause 9? He may already have given such an assurance—I apologise if I missed it.

Nigel Griffiths: The annual report will provide details of end users of equipment. We responded to the Quadripartite report, which made a recommendation about end user monitoring. Our response states:

    ``The Government will continue to provide details of end users for equipment covered by specific licences in confidence to the Committees''

at their request. To be helpful to my hon. Friend and the Committee, I will confirm that and return to the matter.

Dr. Cable: May I briefly reply to some of the points that have been made? I start with the remarks of the hon. Member for Salisbury, whose general point, which had some force, was that extra-territorial application of laws caused problems for international commerce. He is right in saying that in international trade, the Helms-Burton Act and the D'Amato amendments in Congress have created problems for everyone. He will remember, as a member of the previous Conservative Government, that one of Mrs. Thatcher's finest hours came when she stood up to President Reagan on the extra-territorial application of embargoes that aimed to prevent the construction of a pipeline to Russia. As a result of her stand, we have cheap, clean gas in western Europe, which otherwise we would not have had. Extra-territoriality is not an unmitigated good, for the reasons that the hon. Gentleman gave.

The problem with the logic of the hon. Gentleman's argument, however, is that if we live in a world in which the United States applies its regulations extra-territorially while we forsake that option, United States regulations will be applied everywhere. By trying to ensure proper end-use control, we aim to express our concerns in our legislation. There may be some incompatibility between our legislation and that of the United States that would have to be resolved, but I do not think that the hon. Gentleman's objection is a fundamental one.

The hon. Member for Redcar has dealt very well with the points on Indonesia, and I do not want to pursue that canard, as it has been described, unnecessarily. I know nothing about Hawk aircraft or their technical specifications, but the chief of staff of the Indonesian army publicly acknowledged that they had been used in the East Timor conflict. How they got there, I have no idea.

I found the other point made by the hon. Member for Salisbury a little odd. Perhaps when he has been a spokesman on trade and industry for a bit longer, he will rethink his position. He seemed to be saying that it was all right to have a system of monitoring that involves an extensive process of self-regulation by the private sector but that we must not inflict any burdens on the poor old Government. That is the exact opposite of the line that the Conservatives normally take on regulatory matters, which is that we must spare the private sector regulatory obstacles and that the Government must carry the cost. We are not talking about a major piece of regulation, but a small corner of the problem.

10.45 am

I have two reactions to the Minister's intervention. First, I would like to discuss the logic of his arguments about the United States. There are failures in its system, but I am unsure about what conclusions he was drawing from that. If a system is porous and has gaps in it, should it be abandoned? That is rather like the argument that because plenty of drugs get through the American control system, there should be an open market in narcotics—of course there should not be. There should be more monitoring to ensure that those anomalies do not occur. I am not sure of the logic of the Minister's argument.

The other point was more substantial and I sympathise with the Minister on it. The tone of his reply was helpful and I do not think that we are very far apart. We need prevention rather than cure, and there should be a proper system of risk assessment. Applications should be examined before the event to ensure that diversions do not occur. That is absolutely right and I have no quarrel with it. If the British can develop a system that is effective in picking out problems before they happen, we will have made a considerable advance.

My inclination is not to press the amendment, but before I move on I would like to ask the Minister why he feels that it would be unhelpful to have additional powers to check retrospectively? We do not want a vast apparatus for checking that the regulations have been enforced: we just want to have the powers to check. Why might that present problems? Why would it be onerous to have such powers? If he would be kind enough to respond to those points, I will then withdraw the amendment.

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